The Changing Industrial Status of Marijuana... Spotlight on 'Midas AI'

[Asia Economy Reporter Hyunseok Yoo] Marijuana, once used in the shadows, is now permeating everyday life through food, cosmetics, and more. This marks a shift from the past when its use was mainly restricted to medical purposes, showing a trend toward normalization.

As the utilization of marijuana increases, there is a growing perspective that it could be treated as an industrial basic material like crude oil or grains. In the United States, an exchange-traded fund (ETF) composed of marijuana companies as underlying assets has already been launched, raising market interest in marijuana. This is why companies with marijuana cultivation and extraction capabilities are gaining attention.

The full-fledged wave of marijuana legalization began after an official announcement by an international organization. In December last year, the UN Commission on Narcotic Drugs (CND) accepted the World Health Organization (WHO) recommendation to remove marijuana from the list of narcotics. This decision by a credible international organization accelerated the legalization trend in the United States, the largest marijuana market.

In the U.S., where marijuana legal use varies by state, New Jersey recently passed a legalization bill. Currently, recreational marijuana use is permitted in 15 regions, including Washington D.C. Especially with Joe Biden, who campaigned on marijuana legalization, elected president and the Democratic Party controlling both the Senate and the House, the trend is expected to accelerate rapidly and strongly.

The legalization trend is similar in Europe. On June 2 (local European time), the European Commission added cannabidiol (CBD) to the list of cosmetic ingredients. Additionally, in November last year, the European Court of Justice ruled that legally produced CBD can be traded.

CBD is a component extracted from marijuana that is effective in relieving pain and inflammation. In France, CBD oil and flower petal tea are gaining popularity and are sold in specialty stores.

As marijuana use expands into pharmaceuticals, cosmetics, and food and beverages, the related market is growing rapidly. According to market research firm Grand View Research, Inc., the global legal marijuana market is expected to grow to $73.6 billion (approximately 82 trillion KRW) by 2027.

A representative marijuana company, Aurora Cannabis (NYSE: ACB), invested early in marijuana cultivation facilities. In 2018, it acquired competitor CanniMed Therapeutics for 1.1 billion Canadian dollars (approximately 948 billion KRW), becoming the world’s largest cultivation company.

Some domestic companies have also entered the marijuana cultivation business. KOSDAQ-listed Midas AI is conducting marijuana business centered on Melrose Facility Management (MFM), which it completed acquiring on the 9th. According to the company, MFM generates monthly sales of $3 million and is pursuing the acquisition of retail stores and additional cultivation facilities.

A Midas AI representative stated, “There is a growing atmosphere in Korea that broader legal use of marijuana is needed beyond the current scope. Regarding the marijuana business, domestically we will focus on medical research, while overseas we plan to develop commercial sales.”